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Topics in Applied Microeconomics & Development

Paper Session

Saturday, Jan. 4, 2025 10:15 AM - 12:15 PM (PST)

San Francisco Marriott Marquis, Foothill A
Hosted By: Association of Indian Economic and Financial Studies
  • Chair: Amit Batabyal, Rochester Institute of Technology

ICT Skills and Labor Market Outcomes in India: Evidence from the Cell Tower Expansion

Mehtabul Azam
,
Oklahoma State University
M. Shahe Emran
,
Columbia University
Forhad Shilpi
,
World Bank

Abstract

We use nationally representative individual level data to estimate the labor
market impacts of the ICT (Information, Communication, and Technology) skills.
The ICT skill index is constructed for individuals based on seven ICT skills. To
address the endogeneity of ICT skills, we instrument ICT skills with the predicted
cell tower density using the cell tower density at the circle level excluding the
concerned district as explanatory variable, where circle is the administrative
geographical area demarcated by government to allot spectrum. We find that
although ICT skills do not have significant impact on the labor force
participation, it affects quality of employment. The higher ICT skills increase the
probability of regular salaried jobs, while decreasing the probability of self
employment or daily wage work. We also fine the impact women with higher ICT
skills are more likely to employed in service sector conditional on employment.

Mobile Money, Poverty and Inequality

Ablam Estel Apeti
,
Université Clermont Auvergne and University of Göttingen
Alexandru Minea
,
Université d’Orléans, University of Bucharest and Carleton University

Abstract

Based on a sample of 64 developing countries over 1990-2019, we examine the
effect of mobile money adoption on poverty and inequality, using entropy balancing.
We find that countries with mobile money experience lower poverty and inequality.
After checking the robustness of these results, we show that the main drivers of
the favorable effect of mobile money are reduction in working poverty and increased
redistribution. Heterogeneity tests indicate that our result can vary with time, increase
with the intensity of mobile money adoption, change with the type of mobile
money, some structural factors such as the level of development, inflation, corruption,
investment freedom, social globalization, and the initial level of poverty and
inequality.

Construction Productivity and Global Inequality

Kunal Sen
,
UNU-WIDER
Saumik Paul
,
Newcastle University and IZA

Abstract

Two well established stylized facts of economic development are a strong correlation between investment and income, and large differences in investment rates across countries. Construction is the largest component of investment. This paper examines the implications of heterogeneity in construction productivity on cross-country income disparity. We estimate the 10:1 spread in construction productivity among 145 countries in 2005 as a factor of 61.7-fold. Based on a general equilibrium model with input–output linkages, we find that the 10:1 spread in income per capita declines by 45 per cent when the construction productivity gap is eliminated. Sectoral characterization of the aggregate effect of a change in construction productivity shows heterogeneous sectoral contributions to income convergence. Electrical equipment, metals, and transport equipment play stronger roles in transforming the effect of a change in construction productivity to the aggregate level in China compared with other countries.

Immigration and Trade: Skilled versus Unskilled Migration and Corruption

Kusum Mundra
,
Rutgers University
Tianhao Liu
,
Rutgers University

Abstract

This paper investigates the impact of immigration stock on international trade, specifically exports and imports, with a focus on the skill level of immigrants and the corruption levels in their home countries. The study uses regression models to analyze data for countries that include and exclude OECD home countries. The baseline regression models reveal a positive and significant relationship between
immigration stock and trade activities at both skilled and unskilled levels, proxied by the level of education. Notably, immigrant stock with tertiary education has a stronger trade-promoting effect than those with secondary or primary education, particularly on exports. This suggests that skilled immigrants are more influential in boosting exports from the host country to their country of origin.
When examining the interaction between immigration stock and the corruption level in the immigrants' home countries, a significant positive correlation emerges. For the sample including OECD home countries, this interaction is particularly notable for secondary education and shows a larger effect on imports than exports, indicating that higher corruption correlates with a stronger pro-import effect.
Conversely, the non-OECD sample does not exhibit a significant trade-promoting difference between the levels of immigrant education for imports. The interaction between immigration stock and home country corruption remains positive and significant when measured with the SCI indicators, while mixed results are found with CCI and CPI indicators. The models using CPI indicators specifically indicate a significant positive interaction effect on imports at the 10% level.
The study's findings suggest that the level of education among immigrants and the corruption levels in their home countries play a significant role in shaping trade patterns. The evidence points to a more pronounced effect of skilled immigrants with tertiary education on exports, while higher corruption in the immigrants' home countries is associated with increased imports by the host country.

Identity, Beliefs and Dissonance

Aparna Anand
,
Columbia University
Rajiv Sethi
,
Columbia Univeristy

Abstract

This chapter presents a distinct perspective of beliefs in the form of dissonance within a
household by studying the investment decisions of parents. The pattern of positive dissonance
and occupational identity ascertain the values mothers place in the occupation factor as a
component of their self-image. In addition, the positive dissonance in households where
there is child labor substitution shows that the substitution decision is not necessarily due
to a mother’s lower value of beliefs. Importantly, the significant positive effect of negative
dissonance in marginal returns (child’s beliefs towards marginal returns to college is higher)
on time investment by a child shows that children value the educational gain of going to
college more than their mothers. Overall, this chapter produces descriptive evidence of the
role of not just the beliefs but conflict in such beliefs on a household’s investment decisions.
The dissonance is an area of research that has to be explored more to first identify the
pattern of dissonance among low-income households. Then interventions can be designed
to minimize such dissonance between parent and child, which can collectively increase their
investments in education and result in more optimal schooling outcomes.

Artificial Intelligence Based Technologies and Economic Growth in a Creative Region

Amit Batabyal
,
Rochester Institute of Technology
Karima Kourtit
,
Open University and AI Cuza University
Peter Nijkamp
,
Open Universityand AI Cuza University

Abstract

We analyze aspects of economic growth in a stylized, high-tech region A with two distinct features. First, the residents of this region are high-tech because they possess skills. Using the language of Richard Florida, these residents comprise the region's creative class and hence they possess creative capital. Second, the region is high-tech because it uses an artificial intelligence (AI)-based technology and we explicitly model the use of this technology. In this setting, we first derive expressions for three growth related metrics. Second, we use these metrics to show that the economy of high-tech region A converges to a balanced growth path (BGP). Third, we compute the growth rate of output per effective creative capital unit on this BGP. Fourth, we study how heterogeneity in initial conditions influences outcomes on the BGP by introducing a second high-tech region B into the analysis. At time
JEL Classifications
  • D4 - Market Structure, Pricing, and Design
  • O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights